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What Happens If My Company Goes Bankrupt?

In the last few years, the financial markets have gone for a toss. There have been unimaginable fall-outs in the market. In March 2008, U.S. had five major investment banking firms. By the end of that year, there were none. Lehman brothers went bankrupt. Bear Sterns was sold to J.P. Morgan Chase and Bank of America bought Merrill Lynch. Morgan Stanley and Goldman Sachs barely survived with outside capital and converted to a fully regulated bank. What about the employees of these companies?

With such history, now no employee can feel safe. They know that any company, whether big or small, can go bankrupt. And once that happens, job loss is obvious. Being out of job is no good experience. Once you are out of job, you will have to worry about your mortgages and other loans. You do not want mortgage companies on your head for monthly payments. You do not wish to fall into a debt trap. Thus you need to take some corrective actions as soon as your company goes bankrupt. You should limit your losses by claiming all the benefits you are entitled to. Also, applying for a new job will help in reducing any financial problems later.

You may also be worried whether you will get your due salaries and other payments. The question arises that in the event of a company going bankrupt, do the employees have to wait like normal creditors for their payments, or are their special provisions for employees under such cases? The answer is the first obligation of a company is towards taxes, then employees, then creditors and last the shareholders. In case the company voluntarily goes bankrupt, it has sufficient assets to pay salaries to it employees. You can claim your loss pay, redundancy pay and other payments towards your job. However, when a company is forced close, it might not even have that much.

Thus, you need to be careful. Don't be too sure of your job. Even the best-paying employers can be affected by a global event, leading to their downfall. If you feel that your company is shaky, make sure you are updated with all your financial claims so that you will not have to suffer any financial effects later. Also, when your company goes bankrupt, you can collect unemployment that is paid by the government. Your company pays into a state unemployment fund. If the company goes bankrupt and you are out of job, you can apply for the benefits from the state.

Also, the money you have contributed towards a 401K account is held by a trust that is separate from the sponsoring company. Thus, even if your employer goes bankrupt, your 401K account is safe and the vested amount of money in the account is still yours. You should also claim your retirement benefit money from your employer.

Also, always save money. This way you can pay your monthly charges like bills, child education, mortgage repayments etc without any problem even if you are unemployed for some time. If you plan your steps properly, bankruptcy of your employer will not affect you much. There would be a little hardship, but you will be able to come out of it soon.

About the author: Ryan Paul is an professional expert in providing information related to Mortgages andLoans.


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